Michael Klauber was one of the very first restaurateurs to launch a Web site (in 1994), accept reservations online (1995), and to start an email newsletter for patrons (in 1998).

These initiatives were so successful that he persuaded the other entrepreneurs in his family (his father owns a resort, his brother a wine shop, and his sister a clothing store all located in Sarasota Florida) to combine their marketing efforts.

The various businesses (named Michael's Gourmet Group) started growing a marketing database together.

The database soon became unwieldy. “The list of names grew and grew, addresses kept changing, and it became a nightmare to manage,” explains Klauber.

That did not mean he was ready to give up. “One thing I’ve learned is that it’s very expensive to get a new customer, but it’s less expensive to manage the ones you have,” explains Klauber. Relationship marketing via the database could make a huge difference in the Group's bottom lines.

Klauber needed a way to run the database without so much extra work or expense.

CAMPAIGN

First, Klauber researched and found a software vendor who could house the Group's data from all sources and tie it into both the Group's existing point of sale technology and into their email system.

Then he invented a new relationship marketing campaign, The Gulf Coast Connoisseur Club. Membership benefits included special events and offers, as well as a $25 bonus credit for every $250 spent at a Club location.

To get the Club started, all of the Group's locations began offering customers (who they call "guests") a complimentary membership card. Employees prompted customers to use printed sign-up forms near cash registers. Forms were also included in restaurant bill folders.

In addition, the Group promoted the membership card in its printed 'Gulf Connoisseur Club Magazine', a semi-annual that is tipped into Sarasota Magazine (15,000 subscribers).

Plus the Group's HTML email newsletter was repositioned to become a 'Members' Newsletter.' Each month's issue promotes members-only theme dinners, wine tastings, trips, and special offers. Titles are inviting, “The Perfect Summer Soiree,” and “Wine Lover’s Nights,” include festive pictures and notices for special savings and “Double Point Days.” (Link to sample below.)

“It’s a great way to add value to their membership,” says Klauber. “And, members love the club atmosphere.”

The registration form to join asks for customers with their email, address, birthday, and anniversary dates. After entering the new data into the main database, the Group's marketing department sends cards to new members via postal mail.

When members present the cards when they pay for purchases at Group locations, employees swipe them through the special terminal near the cash register, and the transaction goes into the database.

Klauber says, “Because the points are awarded immediately, in-store we don’t have to develop a mail out system or spend a small fortune in direct mail efforts to market to the entire customer base.”

The database provides invaluable transaction details for each business, including: --Sales summaries with a customer information list --Highest frequency guest by location, --Top spender by location, --and the number of gift certificates redeemed.

Michael’s Gourmet also tracks members who have not visited in a while. Then, rather than send out postcards to the 7000 customers, Klauber sends targeted “miss you” printed postcards to select members.

These postcard messages are playful, “You don’t call. You don’t write. Don’t you love us anymore?” They invite members to visit with an incentive, “We’ll celebrate your return with 100 points added to your Connoisseur Club account.” (See sample below.)

Printed cards are also sent on members' birthdays and anniversaries, rewarding members 100 points for their next visit.

RESULTS

Since Klauber started the loyalty program a year agorevenues for The Group are up 15-18% (depending on location). For August (typically the Group's slowest month), sales were up 30% over last year with 1/3 of the overall revenue coming from Club members.

Costs, on the other hand, are down. The Group has cut its print advertising budget cut by over 50%.

The email newsletter in particular has been so successful that Klauber has moved from “all direct mail, all the time” to sending printed newsletters to only 3% of the customer base. A whopping 85% of members have volunteered their email addresses, and there is a 60% average clickthrough on the newsletter.

Klauber notes: “My marketing efforts have totally shifted away from print marketing. I’ve saved hundreds of thousands of dollars annually in associated printing and mailing costs. And the best part is seeing instant results.”

In fact email has been so successful that Klauber is in the process of shifting away from printed postcards for his member birthday and anniversary mailings. The conversion rate for the printed birthday postcard is roughly 10% per month. (Next year we will check in on how that rate changes once these are sent via email instead.)

Human costs have been minimal for the changeover. Klauber has not hired anyone to manage the database. In fact, he says, “If anything, the process now takes less administration.”

According to Klauber, he has found the next-best thing to cloning himself, “We’ve found a very powerful tool to individualize service, but not in an artificial way. Our most loyal customers already knew who they were. Now we’re able to acknowledge them in a very positive way.”

One last note: We asked Klauber what he has learned after more than four years of sending email newsletters. He told us, “It seems like each one we do now is shorter. We know now to keep the messages simple because people don't want to read lots of copy.”

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